Ask RE pro: Can I buy again if I hand my home back to bank?

Louis Spagnuolo of WCS Lending in Boca Raton answers questions from readers. To ask a question that Louis may answer next week, click here.

Q: I am underwater on my home and am looking to do a short sale or a deed in lieu of foreclosure, in which I give the property back to the lender. After this is completed, will I ever be able to buy a home again? -- Stanley

A: Yes. Struggling borrowers who give up their homes through short sales or deeds in lieu of foreclosure will be able to obtain new Fannie Mae loans in two years instead of the traditional four. This new policy takes effect in July and is designed to make foreclosure alternatives more attractive. There are some stipulations, however. To qualify for a new mortgage after the two-year wait, Fannie Mae borrowers must make a 20 percent down payment. Those who have lost jobs or have other extenuating circumstances can make a 10 percent down payment. Also, this program applies only to Fannie Mae loans. Freddie Mac intends to make homeowners wait four years after a short sale or deed in lieu of foreclosure. Owners who go through an actual foreclosure wait five years for both Fannie and Freddie, but they can contest that if extenuating circumstances exist.

Q: Three years ago, I bought a new townhome and am now looking to upgrade to a house. I'm perplexed by all the documentation and forms I am being told that are necessary to obtain a loan. Half the forms do not even make sense and seem to be more confusing than in the past. As a college professor, I normally am pretty astute, but this seems burdensome. Is there any way to make this less painful? -- Theodore

A: You are not alone with your presumptions. Many closings have been dragged out as brokers and title insurers strive to understand the longer, more-detailed documents and explain them to buyers. The new disclosure changes are well-intentioned and are aimed at providing new transparency on costs to buyers, among other goals. But like many initiatives of the current administration, this has not translated to real-world success. The entire industry is dealing with these challenges and as a result, the opposite effect of what was intended is now occurring, causing many buyers to become frustrated and dissatisfied with the entire process.

Q: We are in the market for a new home for our family but will not qualify for a conforming mortgage because our loan amount is above the $417,000 limit. What's the current state of the jumbo loan market? -- Samantha

A: The jumbo market is taking small steps toward normalcy. Jumbo loans still are available to consumers. This week, Redwood Trust Inc. announced plans to sell mortgage-backed securities based on high-quality jumbo loans and, if successful, will be one of the first private firms to do so since 2008. Essentially, this is a sign of loosening credit. We should know in the coming months if we have officially turned the corner in the jumbo market.

Q: I read recently that the government's USDA housing program was out of money and is ending. Is this true? -- Maria

A: The Rural Housing Preservation and Stabilization Act of 2010 would provide additional funding and now is awaiting Senate approval. Multiple consumer groups are pressing the Senate to act quickly to approve the legislation.